Thursday, June 02, 2022
Finance Minister Miftah Ismail announced Thursday that the price of petrol has been moved up by Rs30 to Rs209.86, a few days after increasing the rate of the commodity by the same amount.
Ismail, in a press conference, said Prime Minister Shehbaz Sharif has approved hiking the price of petrol, diesel, and light diesel by Rs30 per litre, while the rate of kerosene oil has been hiked by Rs26.38 per litre, effective from June 3.
"...kerosene oil is the only commodity which is not leading to losses for the government. However, we are facing losses of Rs8 on light diesel, Rs9 on petrol, and Rs23 on high-speed diesel," he said.
The finance minister acknowledged that the lower-income segment of society would be affected the most as a result of the petrol price hike, but noted that the rate of oil has also sky-rocketed in the international market.
In response to a question, the finance minister said he was hopeful of reaching an agreement with the IMF in June, but noted that there were some reforms that the government still had to do.
"The IMF wants to see our budget, so the reforms that we want to introduce will be introduced before the budget. However, we are speaking to the IMF on a daily basis," he said.
Ismail said the price hike was inevitable as he had to strike a deal with the international money lender as ex-finance minister Shaukat Tarin had "tied the government's hands" due to the agreements he made with the IMF during his tenure.
In response to a question, the finance minister said the previous government did not make substantial efforts to import oil from Russia — a much-touted claim that the PTI has been making.
Ismail said when Khan concluded his Russia visit, no newspaper mentioned Islamabad's deal with Moscow a day after that. "If there is a mention of it, let me know."
The finance minister added that ex-energy minister Hammad Azhar had written a letter to the Russian authorities about Pakistan's willingness to import oil from Moscow.
"But they haven't responded [...] and we also contacted them through diplomatic channels, but they opted to not respond to our offer," the finance minister noted.
However, he mentioned that the Russian authorities told Pakistan that the country did not complete the 2015 gas agreement. "So I cannot force the seller," Ismail said.
He noted that Pakistan will be willing to import cheap oil from Russia, provided that no sanction will be imposed on Islamabad.
The finance minister confirmed that Chinese banks have agreed to refinance Pakistan with $2.3 billion worth of funds which is expected to shore up Pakistan's foreign exchange reserves.
In an earlier Twitter, Ismail wrote: "Good news. The terms and conditions for refinancing of RMB 15 billion deposit by Chinese banks (about $2.3 billion) have been agreed."
The finance minister further added that inflow is expected "shortly" after some routine approvals from both sides, adding that this will help shore up the country's foreign exchange reserves.
In a bid to ease the effect of inflation on the masses, the finance minister said the government would try its best to keep the price of sugar fixed at Rs70 per kg and wheat at Rs40 per kg at the utility stores.
The finance minister said the government was giving subsides of Rs100 on cooking oil and Rs15 on rice and pulses at the utility stores across the country.
"The subsidies on cooking oil and ghee will continue for some time, but we will try to ensure — in line with PM Shehaz Sharif's directions — to keep the rates of sugar and wheat fixed."
On today's hike in electricity prices, the finance minister said he has "not seen" the National Electric Power Regulatory Authority's (NEPRA) report as of yet, but assured that the increase would not reflect on June's bills.
NEPRA has raised the basic power tariff by Rs7.9078/kWh for the next fiscal year 2022-23, increasing the burden of inflation on the people of Pakistan.
Currently, the basic power tariff is Rs16.91 per unit, and with an increase of Rs7.9078 per unit, it will be more than Rs24 per unit.
Slamming the Imran Khan-led government, the finance minister said his government had installed "land mines" for the incumbent due to the policies they had made.
Ismail said the PTI government did not make "any decisions" that were fruitful for the country's economy, left historic loans, and his policies were leading to depletion in the foreign exchange reserves.
"I did not have any options except for increasing the prices. Even Imran Khan [would have increased the prices]. But now he is making irresponsible statements that the country will default; an ex-prime minister should not be issuing such remarks," he said.
The finance minister said reducing the government's expenditure would not have a major effect on the national exchequer as the total monthly cost is around Rs40 billion, while the subsidy on petrol costs more than Rs100 billion.
Ismail said even if he reduces the government's expenditure by 10%, the country could save only Rs4 billion monthly, which was not substantial. However, the subsidy on petrol costs the government Rs4 billion per day, he said.
Reacting to the government's decision to hike the prices of petroleum products, former prime minister and PTI Chairman Imran Khan urged people to take to the streets tomorrow to protest the government's "anti-people policies of massive price hikes to crush the public and wreak economic havoc in the country".
"Imported govt has increased petroleum prices by 40% or Rs 60 per litre.This will increase burden on the public by Rs 900 bn & price hike in basic necessities. Plus, the Rs 8 increase in electricity price will put entire country into shock. Expect inflation by 30% highest in 75 yrs," he wrote.
"Our govt sustained pressure of COVID & gave Rs 1200 bn worth economic package. This yr alone we reduced sales tax to zero per cent and additionally provided Rs 466 bn energy subsidies to protect our public. For us, our priority has always been our people."
Ameer Jamat-e-Islami Siraj ul Haq also criticised the government for the price hike and said the decision was "shameful."
"Another Rs30 increase in petrol and diesel prices is shameful. The government has crossed all limits of IMF's slavery. Electricity, ghee, flour and sugar are being made expensive and the right to live is being taken away from the common man. The Jamaat-e-Islami will not stay silent and will launch an Awami Tehreek on June 11," he tweeted.